Getting oil from the well to market is becoming more efficient

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A few miles south of this small town (Pecos), the Houston oil company Noble Energy recently took its first step to get trucks off the road and save money in the Delaware, by firing up the first of four planned central gathering facilities - plants that collect oil, gas and water from its wells through a series of long pipelines, before treating and piping it along to various collection points. No trucks are required.

Noble brought the first facility online a few weeks ago; a second is scheduled for late 2017, and two more for the first half of 2018.

"Out in an area like this, trying to get trucks down these roads, it'd tear them to pieces, and tear up the roads, too," said Russ True, operations manager of the Permian Basin and DJ Basin in Colorado for Noble Midstream Partners, an affiliate of the Houston oil producer and owner of the facility.

Noble Energy's central gathering facilities are just a handful of the ongoing projects - pipelines, terminals, storage tanks - oil companies are building to turn oil and gas discoveries in the Delaware into marketable products. Across West Texas, as companies move farther from developed oil fields around Midland, these projects are following rigs across the empty expanses.

The region's gushing oil wells are expected to put out more crude than they can carry away in pipelines by early next year, according to Chicago research firm Morningstar. The Energy Department projects daily crude output in the Permian will reach about 2.5 million barrels this month, up from about 2 million barrels a year ago.

In the Delaware, the average oil well requires 1,800 truck trips to develop and maintain. Lined up bumper to bumper, that's 18 miles worth of trucks, according to energy research firm Wood Mackenzie. And there are thousands of wells in the region.

"As you drill more and more and move into development mode, costs creep up," said Ben Shattuck, an analyst at Wood Mac. "A centralized gathering system offsets that. You've seen that in other shale plays, and in the gas world."
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There is more.

This is another example of how US shale producers are increasing efficiency to hold down the cost of production. It is one of the ways they were able to withstand OPEC's predatory pricing that tried to drive them out of business.

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